EXHIBIT 10.10(c)
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement ("this Agreement") is made and entered into as of
August 11, 1998 (the "Effective Date"), by and between Harborside Healthcare
Corporation, a Delaware corporation (the "Company"), and Bruce Beardsley
("Executive").
The Company hereby agrees to employ Executive, and Executive hereby accepts
such employment, on the terms and conditions hereinafter set forth.
1. Position. From the Effective Date until the termination of Executive's
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employment hereunder (the "Period of Employment"), Executive shall serve in the
capacity indicated on Exhibit A, and shall have the normal duties and
responsibilities commensurate with such position. During the Period of
Employment, Executive will (a) during normal business hours, devote his full
time and exclusive attention to, and use his best efforts to advance, the
business and welfare of the Company, and (b) not engage in any other employment
activities for any direct or indirect remuneration without the concurrence of
the board of directors of the Company (the "Board"), provided, however,
Executive may continue to serve on those corporate, charitable and community
boards on which he serves as of the Effective Date and which have been
identified to the Board in writing or on any other such boards which are
approved in advance by the Board so long as such activities do not unreasonably
interfere with the performance of his duties under this Agreement.
2. Place and Term of Employment.
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(a) Executive's office shall be at the location set forth on Exhibit
A.
(b) Subject to earlier termination pursuant to Section 6 hereof, the
Period of Employment shall be three (3) years commencing on the Effective Date;
provided that thereafter the Period of Employment shall be automatically renewed
for successive one-year periods on each anniversary of the Effective Date unless
either party hereto gives the other party written notice no later than sixty
(60) days prior to such anniversary of the Effective Date of its election not to
so renew the Period of Employment for the additional one-year period.
3. Compensation.
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3.1 Base Salary. The Company shall pay Executive a per annum Base
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Salary as indicated on Exhibit A payable in accordance with the standard
policies of the Company. Thereafter, Executive's Base Salary hereunder shall be
subject to annual review by the Board, provided that the level of such Base
Salary shall not be subject to reduction below the level indicated on Exhibit A.
3.2 Performance Based Compensation. Executive shall also be entitled
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to participate in an annual performance-based cash bonus program as set forth in
Exhibit B.
4. Benefits.
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During the Period of Employment, Executive shall be entitled to
participate in benefit plans and programs maintained by the Company from time to
time and generally made available to its executive officers; provided that: (a)
Executive's right to participate in such plans and programs shall not affect the
Company's right to amend or terminate any such plan and program, and (b)
Executive acknowledges that he shall have no vested rights under any such plan
or program except as expressly provided under the terms thereof.
5. Expenses; Taxes.
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(a) Upon presentation of acceptable substantiation therefor, the
Company will pay or reimburse Executive for such reasonable travel,
entertainment and other expenses as he may incur during the Period of Employment
in connection with the performance of his duties hereunder.
(b) Federal, state, local and other applicable taxes shall be
withheld on all cash and in-kind payments made by the Company to Executive in
accordance with applicable tax laws and regulations.
6. Termination of Employment.
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6.1 Death or Disability. The employment of Executive and all rights
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to compensation under this Agreement shall terminate upon the death or
Disability (as defined below) of Executive except for such death or disability
payments as may be payable under one or more benefit plans maintained at that
time by the Company and applicable to the Executive. As used herein,
"Disability" means the Board has made a good faith determination that the
Executive has become physically or mentally incapacitated or disabled such that
he is unable to perform for the Company substantially the same services as he
performed prior to incurring such incapacity or disability, and such incapacity
or disability exists for an aggregate of six (6) calendar months in any twelve
(12) calendar month period. In connection with making any such determination,
the Company, at its option and expense, shall be entitled to select and retain a
physician to confirm the existence of such incapacity or disability and the
determination by such physician shall be binding on the parties for purposes of
this Agreement.
6.2 Other Termination without Severance Obligation. The parties
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hereto expressly agree that Executive's employment hereunder may be terminated
by either the Company or the Executive upon 30 days' advance written notice by
the terminating party and that upon any such termination, except as set forth in
Section 6.3 hereof, Executive shall not be entitled to any payment in the nature
of severance or otherwise (other than Base Salary and any other benefits earned
and accrued through the Termination Date).
6.3 Termination with Severance Obligation. Upon termination by the
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Company other than for Cause (as defined below) or by the Executive for Good
Reason (as defined below), Executive shall be entitled to receive from the
Company a lump sum cash severance payment equal to 12 months of Executive's Base
Salary in effect at the effective time
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of such termination. As used herein, (a) "Cause" means that Executive (i) has
been convicted of a felony, or has entered a plea of guilty or nolo contendere
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to a felony; (ii) has committed an act of
fraud involving dishonesty for personal gain which is injurious to the Company
or any of its subsidiaries; (iii) has willfully and continually refused to
substantially perform his duties with the Company or any of its subsidiaries
(other than any such refusal resulting from his incapacity due to mental illness
or physical illness or injury), after a demand for substantial performance has
been delivered to the Executive by the Board, where such demand reasonably
identifies the manner in which the Board believes that the Executive has refused
to substantially perform his duties and the passage of a reasonable period of
time as specified by the Board for Executive to comply with such demand; or (iv)
has willfully engaged in gross misconduct injurious to the Company or any of its
subsidiaries; and (b) "Good Reason" means (i) except as specifically provided
herein, the assignment to the Executive of duties, or the assignment of the
Executive to a position, constituting a material diminution in the Executive's
role, responsibilities or authority compared with his role, responsibilities or
authority with the Company or its affiliates on the Effective Date; (ii) a
reduction by the Company in the Executive's base salary as in effect on the
Effective Date as the same may be increased from time to time or a reduction of
the potential annual bonus expressed as a percent of base salary (subject to
attainment of goals, Board discretion and other conditions of the applicable
bonus program) from the levels in effect on the Effective Date as the same may
be increased from time to time; (iii) a demand by the Company to the Executive
to relocate to any place that exceeds a fifty (50) mile radius beyond the
location at which the Executive performed the Executive's duties on the
Effective Date; or (iv) any breach by the Company of any provision of this
Agreement.
6.4 Release. At the time of termination of Executive's employment,
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Executive agrees to execute a release whereby Executive will release, relinquish
and forever discharge the Company and each of its subsidiaries and any director,
officer, employee, shareholder, controlling person or agent of the Company and
its subsidiary from any and all claims, damages, losses, costs, expenses,
liabilities or obligations, whether known or unknown (other than any rights
Executive may have under (i) any indemnification arrangement of the Company with
respect to Executive, (ii) any employee benefit plan or program covering
Executive or (iii) any stock purchase or stock option plan or agreement to which
the Company and Executive are parties, which Executive has incurred or suffered
or may incur or suffer as a result of Executive's employment by the Company or
the termination of such employment. Executive expressly agrees that payment by
the Company of the severance amount set forth in Section 6.3 shall be deemed to
fully discharge all of the Company's obligations and duties under this Agreement
and Executive shall not be entitled to any other compensation hereunder.
6.5 Mitigation. Executive shall not be required to mitigate the
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amount of the severance payment called for by Section 6.3 by seeking other
employment and the amount of any such payment shall not be reduced by any
compensation earned or benefits received by Executive as the result of
employment by a future employer.
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7. Non-Competition; Non-Disclosure of Proprietary Information, Surrender
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of Records; Inventions and Patents.
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7.1 Non-Competition.
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(a) Executive acknowledges that in the course of his employment with
the Company he will become familiar with the trade secrets and other
confidential information of the Company and that his services will be of
special, unique and extraordinary value to the Company. Therefore, Executive
agrees that, during the Period of Employment and for 12 months thereafter (the
"Noncompete Period"), he shall not directly or indirectly own, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business competing with any business of the Company within the United States
and any other geographical area in which the Company engages in business.
Nothing herein shall prohibit Executive from being a passive owner of not more
than 2% of the outstanding stock of any class of a corporation which is publicly
traded so long as Executive has no direct or indirect active participation in
the business of such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly (i) induce or attempt to induce any employee of the Company to
terminate such employment, or in any way interfere with the employee
relationship between the Company and any such employee, (ii) hire any person who
is, or at any time during the Period of Employment was, an employee of the
Company or (iii) induce or attempt to induce any person having a business
relationship with the Company to cease doing business with the Company or
interfere materially with the relationship between any such person and the
Company.
7.2 Proprietary Information. Executive agrees that he shall not use
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for his own purpose or for the benefit of any person or entity other than the
Company or its shareholders or affiliates, nor shall Executive otherwise
disclose to any individual or entity at any time while he is employed by the
Company or thereafter any proprietary information of the Company unless such
disclosure (a) has been authorized by the Board, (b) is reasonably required
within the course and scope of Executive's employment hereunder, or (c) is
required by law, a court of competent jurisdiction or a governmental or
regulatory agency. For purposes of this Agreement, "proprietary information"
shall mean: (a) the name or address of any customer, supplier or affiliate of
the Company or any information concerning the transactions or relations of any
customer, supplier or affiliate of the Company or any of its shareholders; (b)
any information concerning any product, service, technology or procedure offered
or used by the Company, or under development by or being considered for use by
the Company; (c) any information relating to marketing or pricing plans or
methods, capital structure, or any business or strategic plans of the Company;
(d) any inventions, innovations, trade secrets or other items covered by Section
7.4 below; and (e) any other information which the Board has determined by
resolution and communicated to Executive in writing to be proprietary
information for purposes hereof. However, proprietary information shall not
include any information that is or becomes generally known to the public other
than through actions of Executive in violation of Sections 7.1, 7.2 or 7.3
hereof.
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7.3 Surrender of Records. Executive agrees that he shall not retain
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and shall promptly surrender to the Company all correspondence, memoranda,
files, manuals, financial, operating or marketing records, magnetic tape, or
electronic or other media of any kind which may be in Executive's possession or
under his control or accessible to him which contain any proprietary information
as defined in Section 7.2 above.
7.4 Inventions and Patents. Executive agrees that all inventions,
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innovations, trade secrets, patents and processes in any way relating, directly
or indirectly, to the Company's business developed by him alone or in
conjunction with others at any time during his employment by the Company shall
belong to the Company. Executive will use his best efforts to perform all
actions reasonably requested by the Board to establish and confirm such
ownership by the Company.
7.5 Definition of Company. For purposes of this Section 7, the term
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"Company" shall include Harborside Healthcare Corporation and any and all of its
subsidiaries, joint ventures and affiliated entities as the same may exist from
time to time.
7.6 Enforcement. The parties hereto agree that the duration and area
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for which the covenants set forth in Section 7 are to be effective are
reasonable. In the event that any court or arbitrator determines that the time
period or the area, or both of them, are unreasonable and that any of the
covenants are to that extent unenforceable, the parties hereto agree that such
covenants will remain in full force and effect, first, for the greatest time
period, and second, in the greatest geographical area that would not render them
unenforceable. The parties intend that this Agreement will be deemed to be a
series of separate covenants, one for each and every county of each and every
state of the United States of America. Executive agrees that damages are an
inadequate remedy for any breach of the covenants in this Section 7 and that the
Company will, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this Agreement.
8. Miscellaneous.
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8.1 Notice. Any notice required or permitted to be given hereunder
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shall be deemed sufficiently given if sent by registered or certified mail,
postage prepaid, addressed to the addressee at his or its address last provided
the sender in writing by the addressee for purposes of receiving notices
hereunder or, unless or until such address shall be so furnished, to the address
indicated opposite his or its signature to this Agreement. Each party may also
provide notice by sending the other party a facsimile at a number provided by
such other party.
8.2 Modification and No Waiver of Breach. No waiver or modification
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of this Agreement shall be binding unless it is in writing, approved by the
Board and signed by the parties hereto. No waiver by a party of a breach hereof
by the other party shall be deemed to constitute a waiver of a future breach,
whether of a similar or dissimilar nature, except to the extent specifically
provided in any written waiver under this Section 9.2.
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8.3 Governing Law. This Agreement shall be governed by and construed
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and interpreted in accordance with the laws of the Commonwealth of Massachusetts
(without regard to principles of conflicts of laws), and all questions relating
to the validity and performance hereof and remedies hereunder shall be
determined in accordance with such law.
8.4 Counterparts. This Agreement may be executed in two
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counterparts, each of which shall be deemed an original, but both of which taken
together shall constitute one and the same Agreement.
8.5 Captions. The captions used herein are for ease of reference
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only and shall not define or limit the provisions hereof.
8.6 Entire Agreement. This Agreement together with any agreement,
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plans or other documents implementing the terms of this Agreement constitute the
entire agreement between the parties hereto relating to the matters encompassed
hereby and supersede any prior oral or written agreements relating to such
matters. Without limiting the generality of the foregoing, Executive expressly
acknowledges and agreed that Employment Agreement dated June 11, 1996 between
the Company and Executive and the Change of Control Agreement between the
Company and Executive dated January 15, 1998 shall, upon effectiveness of this
Agreement, be automatically cancelled and of no further force and effect and
Executive shall be entitled to not further compensation or rights of any kind
thereunder (except that Executive shall be entitled to receive from the Company
at the Effective Date the payment called for by Section 1(a) of the Change of
Control Agreement).
8.7 Assignment. The rights of the Company under this Agreement may,
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without the consent of Executive, be assigned by the Company, in its sole and
unfettered discretion, to any person, firm, corporation or other business entity
which at any time, whether by purchase, merger or otherwise, directly or
indirectly, acquires 80% or more of the stock, assets or business of the
Company.
8.8 Non-Transferability of Interest. None of the rights of Executive
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to receive any form of compensation payable pursuant to this Agreement shall be
assignable or transferable except through a testamentary disposition or by the
laws of descent and distribution upon the death of Executive. Any other
attempted assignment, transfer, conveyance or other disposition of any interest
in the rights of Executive to receive any form of compensation to be made by the
Company pursuant to this Agreement shall be void.
8.9 Arbitration. Any dispute, claim or controversy arising out of or
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relating to this Agreement, including without limitation any dispute, claim or
controversy concerning validity, enforceability, breach or termination hereof,
shall be finally settled by arbitration in accordance with the then-prevailing
Commercial Arbitration Rules of the American Arbitration Association, as
modified herein ("Rules"). There shall be one arbitrator who shall be jointly
selected by the parties. If the parties have not jointly agreed upon an
arbitrator within twenty days of respondent's receipt of claimant's notice of
intention to arbitrate, either party may request the American Arbitration
Association to furnish the parties with a list of names from which the parties
shall jointly select an arbitrator. If the parties have not agreed upon an
arbitrator within ten days
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ten days of the transmittal date of the list, then each party shall have an
additional five days in which to strike any names objected to, number the
remaining names in order of preference, and return the list to the American
Arbitration Association, which shall then select an arbitrator in accordance
with Rule 13 of the Rules. The place of arbitration shall be Boston,
Massachusetts. By agreeing to arbitration, the parties hereto do not intend to
deprive any court of its jurisdiction to issue a pre-arbitral injunction, pre-
arbitral attachment or other order in aid of arbitration. The arbitration shall
be governed by the Federal Arbitration Act, 9 U.S.C. (S)(S) 1-16. Judgment upon
the award of the arbitrator may be entered in any court of competent
jurisdiction. Each party shall bear its or his own costs and expenses in any
such arbitration and one-half of the arbitrator's fees and expenses.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first written above.
EXECUTIVE HARBORSIDE HEALTHCARE
CORPORATION, a Delaware Corporation.
/s/ Bruce Beardsley By: /s/ Stephen L. Guillard
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Bruce Beardsley Name: Stephen L. Gillard
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Title: Chairman, President, CEO
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Address for Notices: Address for Notices:
26 Ledgetree Road Harborside Healthcare Corporation
- -------------------------- 470 Atlantic Avenue
Medfield,M.G 02052 Boston, Massachusetts 02210
- -------------------------- Attention: Chairman
__________________________ Fax: (617) 556-1565
With a copy to:
Investcorp International Inc.
280 Park Avenue, 37th Floor
New York, New York 10017
Attention: Christopher J. O'Brien
Fax: (212) 983-7073
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EXHIBIT A
to
Employment Agreement
Name of Executive: Bruce Beardsley
Title(s): Senior Vice-president of Acquisitions
Office Location: 470 Atlantic Avenue, Boston, Massachusetts
Base Salary (1998): $200,000 per annum*
Minimum Base Salary $215,000 per annum
(beginning March 31, 1999 and
beyond):
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*Effective retroactively to April 1, 1998.
EXHIBIT B
to
Employment Agreement
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PERFORMANCE-BASED BONUS
Name of Executive: Bruce Beardsley
For years beginning on January 1, 1999, Executive will be entitled to an
annual performance-based cash bonus determined as follows:
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(A) + (B) =
Corporate Individual Total
Performance Performance Cash
Amount Amount Bonus
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(A) Corporate Performance Amount
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Corporate Applicable Base
Performance = 80% x Corporate x Salary
Amount Performance
Percentage
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Applicable Corporate Performance Percentage determined by Percent of Target
EBITDAR Achieved per the following:
Percent of Target Applicable Corporate
EBITDAR Achieved Performance Percentage
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Less than 90% 0%
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90% or above, but below 100% 20%
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100% or above, but below 110% 35%
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110% or above but less than 125% 50%
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125% 65%
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(B) Individual Performance Amount
Individual Performance Amount will be targeted at 20% of the Applicable
Corporate Performance Percentage of Base Salary, but may be reduced to 0%
or increased up to 40% of such percentage of Base Salary. The actual
Individual Performance Amount will be set annually by the Board in its
discretion based on individual performance of the Executive.
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EBITDAR defined in Schedule B-1 attached.
EBITDAR Targets per Schedule B-2 attached.
Schedule B-1
to
Exhibit B
to
Employment Agreement
Earnings Before Interest, Taxes, Depreciation, Amortization and Rent
("EBITDAR") for a particular period is defined as consolidated net income (loss)
of the Company and its subsidiaries as shown on the consolidated statement of
income (loss) for such period prepared in accordance with U.S. GAAP consistently
applied plus (minus) the following amounts, to the extent such amounts are
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otherwise taken into account in determining such consolidated net income (loss)
(prior to adjustment):
1. Any provision (benefit) for taxes, including franchise taxes, deducted
(added) in calculating such consolidated net income (loss);
2. Any interest expense (net of interest income (other than interest
income reflected in the Management EBITDAR Projections dated March, 1998)),
deducted in calculating such consolidated net income (loss);
3. Amortization expenses deducted in calculating such consolidated net
income (loss);
4. Depreciation expense deducted in calculating such consolidated net
income (loss);
5. Rent expense deducted in calculating such consolidated net income
(loss);
6. Management fees paid to Investcorp to the extent recorded as an
expense in calculating such consolidated net income (loss);
7. Any unusual losses (gains) deducted (added) in calculating such
consolidated net income (loss). This adjustment is intended to exclude, in the
calculation of EBITDAR, the effects, if any, of any transactions outside of the
Company's ordinary course of business as and to the extent determined to be
appropriate in good faith by the Board;
8. Any expense (income) deducted (added) in calculating such consolidated
net income (loss) attributable to transactions involving equity securities of
the Company or its subsidiaries.
The Board reserves the right to make other adjustments to EBITDAR or the
EBITDAR targets as the Board determines in good faith are appropriate to take
into account the effect of material transactions or events during the period
including without limitation acquisitions, divestitures, equity issuances and
significant changes to capital expenditure plans.
In determining whether and to what extent EBITDAR targets have been met for
a period, the aggregate amount of compensation payable to employees as a result
of meeting such targets
will be deducted from EBITDAR to the extent not otherwise included in the
calculation of consolidated net income (loss) for such period.
Schedule B-2
to
Exhibit B
to
Employment Agreement
EBITDAR Targets
EBITDAR TARGET
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YEAR Ending December 31, (In Millions of Dollars)
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1999 $ 80
2000 $114
2001 $151
2002 $192